Electronic Arts makes $2bn takeover bid for Take-Two

Electronic Arts, the American developer and distributor of computer & video games, on Sunday made an unsolicited proposal worth $2 billion to acquire the video game publisher Take Two Interactive Software, Inc., a move that would help Electronic Arts maintain its position as the world's largest video-game maker.

Take-Two, the New York-based game publisher best known for the "Grand Theft Auto” franchise, confirmed Sunday that EA has offered to pay $26 a share for Take-Two shareholders, a 50 percent premium over its share price of $17.36 on Friday. The offer is 64 percent higher than the Feb. 15 closing price of $15.83, the last day of trading before the proposal was made.

However, EA’s $26.00 per share in cash proposal is touted by the Take-Two's Board as inadequate in multiple respects. The board said the rival company’s proposed buyout offer is not in the best interests of its stockholders.

"Electronic Arts' proposal provides insufficient value to our shareholders and comes at absolutely the wrong time given the crucial initiatives underway at the company. We're extremely proud of our unique portfolio of game franchises, exceptional creative talent and loyal consumer following. Our Board believes that we will build greater value for our stakeholders by remaining relentlessly focused on our strategy and delivering on our mission of making the highest quality interactive entertainment," Strauss Zelnick, executive chairman of the board of Take-Two said in an interview yesterday.

Headquartered in Redwood City, California, EA, the maker of “Need for Speed” racing and “Madden” football games, approached Take Two with a $26-a-share offer on Feb. 19 after the company rejected its initial offer worth $25/share on Feb. 15.

"There can be no certainty that in the future EA or any other buyer would pay the same high premium we are offering today," EA Chief Executive John Riccitiello wrote in a letter to Take-Two released Sunday. "Our all-cash proposal is a unique opportunity for Take-Two shareholders to realize immediate value at a substantial premium, while creating long-term value for EA shareholders.”

EA intends to acquire Take-Two before it releases what is widely expected to be the top-selling game of 2008, the Grand Theft Auto IV, the newest addition to Take-Two's blockbuster franchise, which was originally slated for release in the October last.

Grand Theft Auto IV, the next installment of the "Grand Theft Auto” franchise that will be available for Microsoft's Xbox 360 video game console as well as Sony's PlayStation 3, will now hit the market shelves in fiscal 2008's second quarter, which ends in April 2008.